Legislators approve state incentives on biofuel plant

JACKSON – Legislators asked tough questions in a special session Friday but eventually approved state incentives for Texas-based company’s biofuel project.
Gov. Haley Barbour had called Friday’s special session to ask legislators to consider a proposal to offer $50 million in bonds to provide work force training and a loan to entice KiOR of Houston to locate five biofuel plants in Mississippi.
The Legislature approved a package totaling $51 million.
The plants will convert timber and eventually other bio products into a form of crude oil that can be refined into gasoline and other motor fuels that can be used in standard vehicles.
“This is an unbelievable process,” Senate Finance Chair Dean Kirby, R-Pearl.
The legislation passed with limited opposition.
Still, some lawmakers questioned whether the company, which now produces 15 barrels of the crude oil in a test plant in Houston, can successfully mass produce its product.
Legislators also were concerned about the company’s ability to make money if gasoline prices drop below a certain level.
According to Kathy Gelston of the Mississippi Development Authority, KiOR officials had said privately that gasoline prices could get “significantly” lower than now and the company could still make a profit.
But Gelston said she could not publicly say how low gas prices could go.
Sen. Gray Tollinson, D-Oxford, said that if the state is providing a total loan of $75 million to KiOR, legislators had the right to know that price point. But in the end, Tollison and most other legislators voted for the proposal.
Barbour said safeguards are in place to ensure the state does not lose money on the project. One provision requires the company to reach agreement with a refinery to convert the crude oil into motor fuel before receiving any state funds.
“This is a wonderful opportunity for Mississippi to use its natural resources and the people who work with those resources,” said House Speaker Billy McCoy, D-Rienzi.
The idea of using the state’s natural resources to produce energy, he said, is one “we have worked on for several years in the House.”
“I commend the governor and the company for making this happen. I look forward to seeing results.”
The Legislature completed the KiOR project and other items on Barbour’s special session agenda in a day, including confirming Kelly Segars of Iuka and Ed Hill of Tupelo to the state Board of Health.
“The decision by the Legislature to approve the incentive package … is not only an economic development boon for our state, but also a key step toward energy self-reliance for our country,” Barbour said.
The Houston company has committed to building five plants in Mississippi to convert wood chips and perhaps other bio products into crude oil.
The first and smallest plant is scheduled to be built on the Tennessee-Tombigbee Waterway in Columbus. Additional plants will be built in Newton County in east-central Mississippi and in the Bude area in southwest Mississippi. The other two sites have not been determined.
KiOR has committed to creating 1,000 direct and indirect jobs within five years and also has committed to spending $85 million in payroll and in purchase of Mississippi timber.
Included in the incentive package is $2 million, divided between Alcorn State University and Mississippi State University, to help develop methods to efficiently gather other products, such as corn stalks, to be converted to crude oil.
Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@djournal.com.

Bobby Harrison/NEMS Daily Journal